LME Sale: Two Bidders, One Choice

By

Andrea Hotter

May 31, 2012 10:44 am GMT

Bloomberg News

IntercontinentalExchange and Hong Kong Exchanges and Clearing are wheeling out the big guns Thursday in their last ditch efforts to convince the London Metal Exchange to make it the preferred bidder to buy the metals trading exchange.

Teams led by Jeff Sprecher, Chief Executive Officer of ICE and Charles Li, Chief Executive Officer of Hong Kong Exchanges, are meeting separately with the LME board to make presentations highlighting what they deem to be the merits of their proposals.

The pair have been racing around London this week to hold back-to-back meetings with LME shareholders, who are also its members, as the bidding contest reaches its final stages.

So how do the bids stack up against each other?

On the face of it, the two bids appear similar. Both firms have been savvy enough to recognize the value of the LME lies in its unique trading model, including what many outside the business view as a complicated daily dates structure, a vast network of warehouses and licensed firms to operate them, and what to many seems a bizarre open outcry system comprising a ring-shaped trading floor and funny hand signals.

But it’s these seemingly quirky features that have made the LME the world’s biggest metals exchange, accounting for over 80 percent of trading volumes in metals like copper and aluminum.

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